Patiently waiting for June 15 – AgriNews
It will take 12 to 18 months of near-perfect growing weather conditions in the United States for corn and soybean stocks to eventually return to comfortable levels where the threat of “grain shortages” is no longer a problem.
Until then, the key to grain prices rests in Mother Nature’s whims and habits during the months of July and August, at the height of the growing season.
Without argument, there cannot be weather problems that threaten the yields or final production of cereals. Any major weather problem in the future will likely send corn and soybean prices to all-time highs.
Historically speaking, it’s rare to have weather problems before June. But according to agriculture.com in an article written by Krissy Klinger, here are some of her comments on this month: “The first half of May 2021 was the fifth coldest first half of May and the ninth driest in over 30 years for the whole of the Corn Belt. “
She goes on to say, “Precipitation has generally not materialized in the areas most affected by drought in the Dakotas, northern Iowa, southern Wisconsin and much of Michigan.”
As you read his mind, keep in mind that grain stocks are razor thin, there is no tolerance for weather issues or grain prices will skyrocket.
Klinger goes on to tout the data from WeatherTrends369, saying, “Mid-May will bring a more volatile period of weather in the central United States. In fact, the week ending May 20 is expected to be the sixth wettest in over 30 years for the cornbelt. . … Cornbelt temperatures during the week ending May 20 will tend to be the tenths warmest for at least 30 years. “
Being faced with weather issues in May is a sobering thought, based on history. Most grain analysts focus on weather conditions the day before or the day after July 4 to decide whether or not they want to be bullish on grains.
Such an analysis has been accurate from the years 2000 to 2020. However, my work is based on the years 1900 to 2020 and the key date is June 15, not July 4 – no sign of hot, dry weather on June 15 in the corn belt is a reliable signal suggesting that Mother Nature is on the verge of reducing grain yields and production.
Cereal prices will be determined over the next three to four months based on tight spot markets with corn and soybeans and the final acreage composition based on what farmers sowed in the spring – and, finally, of the weather in North America.
And understand that there is historic tension with old crop soybeans and corn, which means any change or overhaul that is significant with the composition of the planned acreage will have a huge, huge impact on prices. Weather problems will only add fuel to the fire.
To fully understand how volatile all markets have become in today’s highly emotional environment, consider what has happened since May 1 with a multitude of markets.
A month ago, for example, bitcoin was trading just over $ 64,400 each, but this week has fallen as low as $ 30,275 each. Old corn futures fell $ 1 a bushel in less than two weeks. Soybeans from older crops fell $ 1.63 in six sessions.
Crude oil slipped $ 5 a barrel in 48 hours. Dow futures plunged to 1,800 points in four days. First-month feeder cattle from early April to early May collapsed by nearly $ 19.
From my book “Haunted By Markets”: “What if corn and beans had trouble germinating due to low subsoil levels? What if the summer was unusually hot and dry? What if another major world grain producer had crop problems? What if record demand for soybeans and products continues as ending stocks decline? There are too many assumptions to mention. “
I wrote all this about the year 2000, but the same can be said of this year, 2021. And that is precisely where I stand today when I look at stocks thin like soy razors. and corn, coupled with robust and insatiable demand from China in the face of weather challenges. bubbling in Brazil and the United States.
But, of course, the date I get pretty optimistic and decide to press the long side of the grain complex is June 15th. I wait patiently for that day to unfold before I become even more optimistic about grains.
Keep track of the significance of June 15th by going to commodityinsite.com. That day will come sooner than you think. And I personally look forward to this historically important day with a breath of breath and an uptrend because every bushel of grain is needed to keep prices from skyrocketing to new all-time all-time prices.